India’s wholesale price index (WPI) in December rose to 2.37 per cent from 1.89 per cent in November 2024, according to data released by the Ministry of Commerce and Industry on Tuesday. The ministry attributed this rise to increase in price of food articles and manufacturing of food products. Rise in textile manufacturing costs also attributed to the rise in inflation.

       During December 2023, WPI inflation came in at 0.73 per cent.

       WPI Food Index saw a marginal decrease to 8.89 per cent in December 2024 from 8.92 per cent in November 2024. The WPI for food items experienced a sharp dip, falling to 8.63 per cent in November from 13.54 per cent in October. Meanwhile fuel prices fell by 3.79 per cent, significantly less than the 5.83 per cent drop witnessed in November.

       Manufacturing rose to 2.14 per cent from 2 per cent, the month prior.

       Price of food articles (-3.08 per cent) and crude petroleum and natural gas (-2.87 per cent) decreased in December 2024 as compared to November 2024. The Price of non-food articles (2.53 per cent) and minerals (0.48 per cent) increased in December month-on-month.

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       In December 2024, the prices of electricity and coal rose by 8.81 per cent and 0.07 per cent, respectively, compared to November 2024. However, the price of mineral oils saw a slight decline of 0.06 per cent during the same period.

       WPI tracks the prices of goods and services at the wholesale level - in other words, the price before the goods reach the consumers. In contrast, CPI tracks the average price of goods and services at the consumer level - in other words, the goods and services purchased by households.

       December retail inflation

       December's retail inflation rate, measured by the Consumer Price Index (CPI), fell to its four month low of 5.22 per cent. Although, it was only a slight dip from 5.48 per cent in November. This decrease was largely attributed to a notable drop in prices of key food items, including vegetables, pulses, sugar, and cereals. The rate also fell within the central bank's 2 to 6 per cent tolerance band.

       ALSO READ: India's retail inflation eases to 4-month low of 5.2% in December

       RBI repo rate

       The Reserve Bank of India (RBI) kept its benchmark interest rate, or repo rate, unchanged at 6.5 per cent for the 11th consecutive time in its latest monetary policy meeting. The RBI maintained a 'neutral' stance, focusing on balancing inflation control and economic growth. However, the central bank reduced the cash reserve ratio (CRR) for banks for the first time in over four years, aiming to ease monetary conditions amid slowing economic activity.

       India's GDP growth unexpectedly decelerated to 5.4 per cent in the July-September quarter, marking its slowest pace in seven quarters, while inflation remained above 4 per cent.

       Former RBI Governor Shaktikanta Das, in what was his last RBI MPC meeting, explained that lower inflation would boost households’ disposable income, enhancing purchasing power and supporting both consumption and investment demand.

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